All posts tagged renault

The Renault-Nissan alliance is already growing fast, but it could find new friends knocking on its door to benefit from its technology and economies of scale. At least, that’s what Carlos Ghosn, the chief executive of both Renault of France and Nissan Motor Co of Japan, believes.

Unlike many automobile industry alliances that have foundered over the years, the Renault-Nissan alliance founded 15 years ago when Renault came to Nissan’s rescue, has become stronger thanks to increased industrial and R&D synergies. Later this year, Renault and Nissan will take over AvtoVAZ, Russia’s leading auto maker, and the two companies are forging closer industrial links to Germany’s Daimler AG.

Renault stopped selling its cars in North America in the late 1970s, but the French company has no interest in returning to the U.S. even though there are plenty of opportunities in the huge U.S. market, Mr. Ghosn said.

At a meeting at the U.S. embassy in London earlier this week, Peter Harrell, the U.S. State Department’s deputy assistant secretary for threat finance and sanctions, met British and French executives—including representatives from Royal Dutch Shell, Total and the aircraft-engine division of Rolls-Royce—to make it clear that any business now allowed with Iran must be limited to the six-month window of the deal, according to people familiar with the matter.

“The message we got is that you can’t sign any long-term commitment,” said one executive who participated in the London meeting.

Carlos Ghosn’s nightmare scenario must surely involve waking up in a cold sweat, wondering if the bold decision by his predecessor Louis Schweitzer nearly 15 years ago to create a low-cost brand for French car maker Renault was just a dream.

Luckily for him, Renault’s shareholders, and its 127,000 employees, it’s very real. The low-cost range has become the locomotive that’s driving the French auto maker’s sales and profits. That’s because, whether on purpose or by accident, Renault’s low-cost range of reliable, low-tech and affordable vehicles has hit the sweet spot with legions of consumers with crimped household budgets who are quite happy to get back to basics.

Last year, Renault and its Dacia sub-brand sold 1.09 million cars built using the M0 platform that’s used to underpin no-frills cars, an increase of 14% from 2012. This range of vehicles, made in countries with low labor costs like Romania, Colombia and Morocco, represented 41% of Renault’s sales last year, according to data released by the company on Tuesday. The Duster, a wannabe sports utility vehicle that’s sold wearing the Renault and Dacia badges, is the group’s top-seller.

Another development today in the auto industry’s long path toward globally-integrated giants, as reported by the WSJ’s David Pearson:

Renault, Nissan and Mitsubishi Tuesday said they have agreed a new, potentially far-reaching, industrial partnership to share factories and technology as well as boost sales in North America and emerging markets partly through the joint development of electric vehicles.

Expanding the Renault-Nissan alliance to a fifth partner—the French and Japanese companies have tie-ups with Germany’s Daimler and Russia’s AvtoVAZ—is just the latest move toward the creation of massive multibrand global automotive groups that can compete with the likes of Germany’s Volkswagen and Japan’s Toyota.

Renault’s crosstown rival PSA Peugeot-Citroën has a broad cost-saving alliance with General Motors. Italy’s Fiat is trying to complete the full takeover of the third-biggest U.S. auto maker, Chrysler.

Now is not a good time to be anything less than a giant globally-integrated carmaker, as the struggles of locally-focused operations like India’s Hindustan Motors or Australia’s Holden (owned by GM) show. If you can’t build up a Toyota-sized global player, at least shoot for a Toyota-sized global alliance, right?

Renault SA and its partner Nissan Motor Co., finding it tough to convince drivers to buy their electric cars, at least have the satisfaction of knowing that they aren’t the only auto makers throwing billions of dollars at the technology. Their German rivals took the wraps off a wide range of new hybrid-drive and electric cars at the Frankfurt motor show this week with even super-luxury auto maker Rolls-Royce talking of future hybrid versions of its limousines.

“The more companies that buy into electric cars, the better it is,” because it brings the tipping point of mass market adoption closer, said Carlos Ghosn, the chief executive of Renault and Nissan, said during a joint press conference with Daimler AG Chief Executive Dieter Zetsche.

“Everybody seems to be piling in, and that gives great credibility to our strategy, but we’ve got an eight-year jump on our competitors,” said Nissan’s executive vice president Trevor Mann in an interview.

“We started on our EV journey eight years ago. We said we would be number one and we are,” Mr. Mann said.

Carlos Tavares’ abrupt departure today as Renault’s No. 2 executive deprives the company of a seasoned and respected manager and focuses the spotlight on the as yet unrevealed plans for life after Carlos Ghosn. Mr. Ghosn is not just Renault’s chief executive, he’s also head of its alliance partner Nissan Motor Co.

Mr. Ghosn is no ordinary manager in the auto industry. After a long career at Michelin, the French tire maker where he hoped to rise to the top, he joined Renault and was soon sent off to Japan to run Nissan in 1999 after Renault rescued it from financial collapse. Mr. Ghosn has since turned the Renault-Nissan alliance into a rare example of successful intercontinental cooperation in an industry littered with disastrous cross-border tie-ups.

The Datsun is back! Nissan’s storied brand was killed off in the 1980s, but last year the company first began speaking of its return as a low-cost option for emerging markets. And today, we get our first look at the the sub-$7,000 Datsun Go, which will go on sale in India, Indonesia, Russia and South Africa next year.

During a meeting with reporters on the sidelines of the New York auto show, Mr. Ghosn said he stands by his forecast that electric cars, including the all-electric Leaf, will account for 10% of Nissan’s global sales by 2020.

“We just have to be extremely patient and resilient,” he said.

The Leaf cost twice as much to design and engineer as a regular car, Mr. Ghosn said, indicating the project cost about €4 billion. But the Leaf “is one car over 64” total models that Nissan sells, he said. “It’s a big stake, but not a stake that will shake the foundations of Nissan.”

Since launching production of the Leaf and other electric vehicles in 2011, the Renault-Nissan alliance has sold about 67,000 zero emission vehicles globally. Nissan officials said the company expects March sales of the Leaf in the U.S. to be the best ever at close to 2,000 cars for the month. Nissan recently began building the Leaf in the U.S.

Mr. Ghosn said Nissan also is still aiming for a 10% share of the U.S. market, although the recent resurgence of Japanese rivals Honda Motor Co. and Toyota Motor Corp., has contributed to a stall in Nissan sales at about 8% of the U.S. market.

Nissan said earlier this month its U.S. profits for the fiscal third quarter fell by 35%, in part because of steeper discounts.

Mr. Ghosn said he expects to hit the 10% goal, because unless Nissan hits that level “we are not having a fair return on our investment.” Long term, he said, he wants even more.

It doesn’t take much for the French government to scratch its “dirigiste,” or interventionist, itch.

The decision by PSA Peugeot-Citroen to write down the value of its automotive and financial assets in Europe by more than four billion euros certainly did the trick.

Just hours after the ailing French auto maker’s announcement, Budget Minister Jérôme Cahuzac was promising the government would do all it could to prevent Peugeot from disappearing. In theory, that could involve the government taking a stake in the family-owned car maker, Mr. Cahuzac said. The French government already owns a 15% stake in Renault SA, Peugeot’s French rival.

Still, the question remains whether French government investment in Peugeot would make any difference.

Peugeot’s problems are primarily industrial and strategic, rather than financial. It is primarily a maker of small cars and heavily reliant on Europe for sales. So it’s far from clear a capital injection from any source would help unless those problems are addressed at the same time.

Indeed, the European industry hasn’t gone through the shock therapy meted out to U.S. auto makers after the 2008 financial crisis: multiple plant closures, product streamlining, as well as direct investment by the federal government.

Peugeot is among those mass-market auto makers suffering most from Europe’s chronic over capacity, with 15 to 20 factories operating at less than 50% of capacity according to analysts.

The auto maker is shuttering output at a plant near Paris next year as part of plans to cut 8,000 jobs but the moves face government and trade union opposition. Few other factories in Europe have closed. Ford has said it will close two this year. General Motors Co. is in talks about closing one of its Opel unit’s factories in Germany, possibly only after 2016.

Peugeot’s restructuring plans look increasingly modest as auto sales continue to slide and stronger rivals like Volkswagen AG take market share. Registrations of new Peugeot cars fell 17% in France in January from a year earlier. The scale of the Peugeot write-down shows how pessimistic the auto maker is about near-term growth. As for help from GM, Peugeot is nearly a year into its alliance with the U.S. manufacturer but they set a target of $2 billion in yearly savings within five years.

The Peugeot family is worried that it may not get through the trough in European car demand without state support, according to one person close to them. The government, while ruling out any immediate capital injection, clearly is mulling a Plan-B to Peugeot’s own restructuring program. But the larger problem of Europe’s oversupplied auto market remains. Read More »